It’s been another great year for the world’s most valuable cruise line operator by market cap and enterprise value, despite being just the second-largest cruise line by revenue and passenger volume. After soaring 89% so far in 2024, shares of Royal Caribbean Cruises (NYSE: RCL) hit another all-time high on Tuesday. The stock could wind up doubling this year if the market proves buoyant over the holiday season.

That wouldn’t be a fluke. Royal Caribbean stock more than doubled last year with a 162% surge. Could it pull off a hat trick by repeating the feat in 2025? A stock more than doubling in back-to-back years is impressive. Doing it for three years in a row is naturally an even rarer occurrence. But momentum and fundamentals are on the side of the cruise line operator.

Just add water

It’s not a surprise that the cruise line industry was the hardest hit of the major travel market segments after the pandemic struck. Unlike the airlines, hoteliers, train operators, and rental car agencies that were able to continue operating — albeit with new safeguards — cruise ships were stuck empty in port, unable to take on revenue-generating passengers for more than a year.

Even when they were permitted to begin sailing again, the hoops of vaccination requirements and pre-boarding COVID-19 tests made booking cruise getaways less appealing. Yet the pent-up demand that built during that lull helped Royal Caribbean and its rivals spring back to life once conditions began to normalize. Unlike other travel segments that suffered through a drop-off in activity after the initial post-social-distancing “revenge travel” bounce, cruise lines have steadily been generating record results.

Royal Caribbean’s trailing-12-month revenue now exceeds $16 billion — 47% higher than it was in 2019. Its earnings per share have also never been higher, even though it had to bloat its share count and balance sheet to stay afloat during the regulator-mandated freeze in operations. With advance bookings also setting high-water marks for this time of year, it’s easy to get excited about the prospect of continued success in 2025.

Learning where the lifeboats are located

Analysts expect Royal Caribbean’s revenue and earnings per share to rise by 9% and 23%, respectively, in 2025. Recent history suggests that reality could be even better than what Wall Street pros are modeling. Royal Caribbean has been a lucrative investment over the past two years because it has consistently cranked out “beat and raise” quarterly updates. Here’s how the last half dozen earnings seasons have played out for the cruise line operator.

Data source: Yahoo! Finance. EPS = earnings per share.

The boo birds will gravitate to the final box in the table. Besting analysts’ profit targets by a mere 3% after more than a year of double-digit percentage beats might suggest that the market is starting to catch up to Royal Caribbean. However, all of these beats came following quarter after quarter of analysts pumping up their projections as Royal Caribbean pushed its guidance higher. Put another way: Don’t assume that analysts won’t keep nudging their estimates for 2025 higher with each passing quarterly report. Go ahead and bookmark this page, and get back to me a year from now. Let me know if analysts are only bracing for 9% and 23% growth on the top and bottom lines for the full year.

I’ll admit, reality could yet turn out to be worse than predicted. There are a lot of moving parts that impact a cruise line’s performance. Inflation, interest rates, upticks in fuel prices, and currency fluctuations can gnaw away at the business. Geopolitical tensions and macroeconomic headwinds can obviously rock the boat. Thankfully, Royal Caribbean is priced reasonably as the market sails toward the great unknown of 2025.

Though its share price has surged nearly fivefold since the start of 2023, Royal Caribbean is trading for less than 17 times 2025’s projected earnings. If analysts’ earnings estimates keep moving higher, that ratio will naturally get lower — if the stock stands still. Bulls don’t think the stock will stay anchored in these waters, of course. To all appearances, hordes of people are still yearning to set sail, and they seem willing to spend more on their ocean-bound escapes. Given all that, it’s hard to bet against cruise line stocks in 2025.

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Rick Munarriz has positions in Royal Caribbean Cruises. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.